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Great Read in the FP: When Will Rates Peak?
July 12, 2022
8:42 am
lifeonanisland
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July 12, 2022
9:52 am
Dean
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July 13, 2022
1:08 pm
TommyT
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lifeonanisland said
This is an opinion piece, but a very nicely-researched one. Definitely worth a read. https://financialpost.com/investing/interest-rates-are-still-rising-but-investors-should-start-preparing-for-when-they-come-back-down  

It looks like the Government of Canada 30 year bond has peaked in yield at least for the rest of this year. GIC rates will still rise. This is to notify everyone about the 30 year bond.

July 16, 2022
12:17 pm
TommyT
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lifeonanisland said
This is an opinion piece, but a very nicely-researched one. Definitely worth a read. https://financialpost.com/investing/interest-rates-are-still-rising-but-investors-should-start-preparing-for-when-they-come-back-down  

Inflation peaked for the entire rest of this year 3 days ago on July 13th. There will be downward pressure on interest rates right to the end of this year especially in America. Yields on the long bonds will fall, long bonds will gain in value. Inflation should take a second leg up at the very beginning of 2023 which will end in March 2023. They'll hold the Bank of Canada rate until March 2024 when it will fall for the rest of 2024. The Bank of Canada rate should start falling March 2024. It could take a minor fall before then but it won't be a trend.

July 16, 2022
12:44 pm
HermanH
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TommyT said They'll hold the Bank of Canada rate until March 2024 when it will fall for the rest of 2024. The Bank of Canada rate should start falling March 2024. It could take a minor fall before then but it won't be a trend.

So, you are predicting no further BoC rate increases in Sept or December?

July 16, 2022
1:38 pm
Loonie
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What is special about March 2024? Why would that be a turning point?

July 16, 2022
2:23 pm
savemoresaveoften
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Loonie said
What is special about March 2024? Why would that be a turning point?  

Check ur own crystal ball, it is as good as any, seriously.

July 16, 2022
3:14 pm
Canuck
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savemoresaveoften said
Check ur own crystal ball, it is as good as any, seriously.  

Well, it's a prediction, so it should be based on something (and it probably is).

July 16, 2022
3:33 pm
HermanH
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This is a (good) discussion forum. I enjoy listening to learn how others arrive at their projected conclusions.

July 16, 2022
4:33 pm
Loonie
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I agree. If anyone has any useful info, I'm all ears! We will, of course, all come to our own conclusions.

The very weird thing is that, about an hour before Tommy posted this, I had the same thought, and it contradicts all my previous thoughts.

I'll see what happens over the next few weeks. If rates seem stuckish, I'll be looking at locking in some of my cash for this year.

July 16, 2022
5:36 pm
HermanH
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When you lock cash, what is your time horizon? 1-yr? 3-? 5-? 10-?
I am considering some 7- or 10-yr at 5.15% with Motive. Not all, but some.

July 16, 2022
6:30 pm
Loonie
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I'll be looking mostly at five years. Some of the money that I held back last year because of low and rising rates will need to be four years now.
I probably won't go beyond five years because of my age (75) unless rates go up significantly for those longer terms. If I went long, I'd look on it as a kind of term annuity, with monthly payout (Motive), where I get the principal back in the end if I live that long. At five or six per cent, the income isn't that much different than annuity payments at my age - and you or your estate get all the principal back in the end. https://www.sunlife.ca/en/tools-and-resources/tools-and-calculators/annuity-calculator/

If I were younger, I might see it differently.

July 16, 2022
6:31 pm
Bill
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TommyT, are you saying world events like Russia action in Ukraine, Chinese ports' bottlenecks due to virus shutdown policies of CCP, etc, etc have no inpact on how all this unfolds? Your predictions with definite dates seem to indicate current events don't play into your vision.

July 17, 2022
8:35 am
phrank
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Not like I take the BoC's word on things or value their opinion more than anyone else, but they do make the policy and they say inflation rates are still going up. I'm pretty wary of anyone who says anything definitively when it comes to economics as the saying goes, a good economist is right 50% of the time.

BoC says inflation is to pass 8% as soon as next week and stay in that range for few more months

IMO, what that tells you is the people who decide whether to raise rates or not will most likely be raising rates in Sep, Oct and maybe Dec. Of this there is about a 50% chance sf-laugh

July 17, 2022
8:48 am
mordko
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phrank said
Not like I take the BoC's word on things or value their opinion more than anyone else, but they do make the policy and they say inflation rates are still going up. I'm pretty wary of anyone who says anything definitively when it comes to economics as the saying goes, a good economist is right 50% of the time.

BoC says inflation is to pass 8% as soon as next week and stay in that range for few more months

IMO, what that tells you is the people who decide whether to raise rates or not will most likely be raising rates in Sep, Oct and maybe Dec. Of this there is about a 50% chance sf-laugh  

Lots of complex factors in play and BoC has lost a lot of trust. Still, this is one prediction I am prepared to buy 🙂

July 17, 2022
9:51 am
JohnnyCash
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I'm not going to defend decisions made by the BoC since the world started going sideways in the early part of 2020. However, there's sure a lot of Monday morning quarterbacking going on. The BoC has constant data rolling in and has to make decisions after analyzing the information at hand. What they cannot do is predict global events such as Covid, wars and the cascading ripple effects like supply chain issues and oil prices. In the past year, or two, they've made statements such as, interest rates would stay low and inflation was transitory, fair enough if that was based on the data they had at the time when doing the projections. If global events remained static, then it's a breeze to make predictions and set rates, but that's not reality, nor will it ever be.

July 17, 2022
12:39 pm
phrank
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JohnnyCash said
I'm not going to defend decisions made by the BoC since the world started going sideways in the early part of 2020. However, there's sure a lot of Monday morning quarterbacking going on. The BoC has constant data rolling in and has to make decisions after analyzing the information at hand. What they cannot do is predict global events such as Covid, wars and the cascading ripple effects like supply chain issues and oil prices. In the past year, or two, they've made statements such as, interest rates would stay low and inflation was transitory, fair enough if that was based on the data they had at the time when doing the projections. If global events remained static, then it's a breeze to make predictions and set rates, but that's not reality, nor will it ever be.  

If I had a boss, I wish they were you! sf-laugh

July 19, 2022
10:31 am
Winnie
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My predictions.
Right now BOC rate is 2.5%.
On September 7,2022 BOC rate will raise 0.5% or 0.75% and BOC rate will be 3% or 3.25%.
And, before end of the year, either on October 26 and/or December 7,2022 BOC will raise rate again either 0.25% or 0.5% total (one or two raises cumulative). Before end of 2022 BOC rate will be 3.25% or 3.5% max, no more.

July 24, 2022
12:55 pm
TommyT
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HermanH said

TommyT said They'll hold the Bank of Canada rate until March 2024 when it will fall for the rest of 2024. The Bank of Canada rate should start falling March 2024. It could take a minor fall before then but it won't be a trend.

So, you are predicting no further BoC rate increases in Sept or December?  

The BOC will increase the Bank of Canada rate in September but the bond market will dictate the yields on GIC's. GIC rates seem to have topped out permanently at 5 years and beyond. I expect the Bank of Canada to cut the Bank of Canada rate around March 2024. Interest rates in Europe will continue to move higher. We should see inflation increase for a long time in Europe while it decreases at the same time in America and in Canada.

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